Branden Givand spent his pre-pandemic days frying 20 pounds of carnitas out of his 500 square foot apartment in the Washington, D.C neighborhood of Shaw.
New to D.C, Givand was running Pelota, a Latin fusion meets D.C catering business that served half smokes and mambo sauce at distilleries, pop up breweries, and to government contractors. Business was good and Givand was gaining the traction he needed to soon open his own neighborhood restaurant – until March 17th when the world shut down due to the Coronavirus pandemic.
When funds began to dry up quickly, Givand had to figure out a way to adapt. With $300, Givand purchased bottles, labels, and ingredients to start creating homemade hot sauce and bloody mary mix which he named, Sauce City.
Givand for the last two years has watched his company grow into a thriving online business, but while it is successful now, the 36-year-old wonders how long he can sustain.
“I feel like, especially in our community, we lack knowledge. I need the knowledge to understand what it’s going to take to scale my business and also, who can help me stay local,” said Givand.
Givand is one of the Black business owners who saw a huge bump in business in 2021. According to the University of California Santa Cruz, researchers point to a 30% jump in Black-owned business ownership, but Givand and others question how they can maintain momentum and sustain their businesses saying they need support and training. They fear the bump may be hampered by waning support for Black businesses.
History of Black Business Ownership
Black business ownership has a long history in both D.C and in the nation. Black Wall Street, referencing the affluence of black business owners in Tulsa, Oklahoma, housed over 200 types of Black owned businesses until it was burned to the ground by white rioters in 1921.
“A single dollar would stay in Tulsa for almost a year before leaving the Black community,” said behavioral economist and author of The History of the Black Dollar Angel Rich. “According to a 2016 report by the NAACP, a dollar can circulate in the Asian communities for a month, Jewish communities for 20 days, and white communities for 17 days.
Today, a single dollar lasts in the Black community only six hours.”
Angel Rich believes the three most important aspects to helping sustain a business are human resources, accounting, and customer service which historically Black businesses tend to fall short. Because of this knowledge gap, Black businesses are at a deficit.
“For a long time, other cultures have already sort of had their financial pyramids built and structured. In the black community, we traditionally have not had a linkage of business owners being able to come together and be able to scale up like other people do,” said Rich.
The Pandemic and Black business ownership
The pandemic struck a crushing blow to small businesses already facing the challenges of competing with larger companies with resources and reserves.
Jabari Jones, an economist and president of the West Philadelphia Partner Collaborative, an association of small businesses, considers that to boost Black-owned businesses, communities need to be able to have support among one another through resources including funding, representation, and advocacy.
Black owned businesses were hit harder than any other racial group at the beginning of the pandemic by the limitations built into the government’s pandemic aid programs such as the Paycheck Protection Program. In April of 2020, the nation saw a 41% drop in Black business ownership, according to the National Bureau of Economic Research.
“The individuals that had $10 million sitting in their account, you know, that guy’s PPP loan is going to be processed before the hair salon, that keeps maybe $5,000 in their bank account,” said Jones.
To this point, the Black business owners remaining during the pandemic were forced to innovate or close
For Washington, D.C’s oldest Black owned flower shop, Lee’s Flowers and Cards, having the resources made adapting to the new normal easier.
“We were affected [by the pandemic] tumultuously, but it was in a positive way,” said Stacie Lee-Banks, president of Lee’s Flowers and Cards.
As the third generation of the family business, Stacie Lee-Banks and her father, the former owner, Richard Lee, recall when the pandemic hit and the store immediately pivoted toward contactless deliveries and pickups. As people’s interests for plants soared during the pandemic, so did Lee’s sales. What used to be 20 deliveries a day are now 60 to 75 deliveries a day.
In the second year since the beginning of the pandemic, the success of their pivot has allowed the owners of Lee’s Flowers and Cards to open a second location in Union Station.
While Richard Lee inherited this shop from his mother and father, Lee’s uncle was an owner of a florist shop and encouraged Lee’s father, a train porter traveling from Montreal to Washington, D.C, to work with him in the business. The shop was so active that Lee’s father started his own shop in 1945. The Lee’s are one of a few businesses on the bustling U Street that own their building. Especially during gentrification and the pandemic, rents and urban renewal has influenced rental and ownership attainment for black businesses.
Lee maintains, “Fortunately, we own our building. There are only three companies that own their own buildings because when the riots and the gentrification started taking place, people were forced out because they couldn’t afford to rent. Everything went up.”
Like Angel Rich, Rick Lee believes that one of the success tools to sustaining funding through investors and banks is to establish a track record. Lee’s Florist had an advantage of receiving funding from Industrial Bank, a Black owned bank established slightly before the flower shop opened.
While Lee’s Flower shop is fortunate to have established the means to sustain their business generations prior, Givand, like many others, are bootstrapping to stay afloat. Givand mentions that even though banks and venture funders took an active role in supporting Black owned businesses as a result of the nation’s social and racial unrest, he has seen the momentum die down from year to year.
“The first year of the pandemic , that Black History Month was popping because there was a lot of guilt money. People felt some type of way. I have not seen sales like that since then,” said Givand.
Since then, Givand has tried to apply for grants and establish relationships with venture funders to help his bottom line.
Advocacy, Accelerators, and Capital
As immediately as the pandemic’s impact affected Black owned businesses in 2020, particularly after the death of George Floyd and countless others during social and racial unrest, this era ushered in a new wave of funding directed toward Black businesses. This infusion of cash uplifted some business and brought others back to life. This also made a way for more black businesses to seek venture capital funding.
Melissa Bradley, an investor, serial entrepreneur, and founder of 1863 Ventures has established a business model that gives entrepreneurs the tools to stay on an equal playing field. 1863 Ventures is one of only 12% of venture capital firms that focus on scale. Through programs focusing on accelerators, mentorships, and funding, 1863 Ventures has helped 92.5% of their business partnerships survive during the pandemic.
“Our biggest model is capital. We provide funding but we are also one of the few programs that actually teaches people how to manage their finances,” said Bradley.
One business that has successfully utilized 1863 Ventures is Federal Construction, Inc., a Black female owned construction company located in the Anacostia neighborhood of Washington, D.C. Owner Lisa Deane, says that securing funding for her construction company was tricky until 1863 Ventures stepped in to help.
“I have gotten a number of alternative financial funding from 1863.They have introduced us to bankers, helped us with our credit, and have given us the chance to build out our cash reserves,” said Deane.
While Deane has been a partner with 1863 Ventures for the last seven years, she says that her network continues to expand with other Black owned businesses who have also participated in their programs.
1863 Ventures has raised over $5 million dollars of capital with the goal of $10 million for entrepreneurs.
Local Businesses are the backbone for America’s economy and sustaining Black businesses does not just help the individual entrepreneur, it helps the economy as a whole. As economist Jabari Jones mentions, Black owned businesses are more likely to hire from their communities than corporate chains or franchises.
“When Black Businesses hire black businesses, typically there are better rates, better work environments, and a level of shared experiences. From an economic standpoint, when black businesses generate more income it increases the types of businesses and customers a community can have,” said Jones.
As Black business owners work to keep this momentum, it may still seem like there is more work to do, but as Sauce City’s, Branden Givand believes, “There’s more opportunity now than there ever will be. This is the time to be a black business owner.”